How to Decide When It’s the Best Time to Buy a House

best time to buy a house

Buying a home is probably the most expensive thing you will ever do. You want to get a good deal and you want to make sure it’s the best time to buy a house.

Like so many other things in life, when you buy matters. There’s the best time to buy a house, and times that aren’t ideal.

The key is to consider your situation, look at the market, and use that information to make an educated guess about when you’re likely to get the best deal.

Economic factors and buying a house

Looking at the economy can be a good way to figure out if this is the best time to buy a house.

Are home prices and mortgage rates going up? If so, you want to get in there and lock in a deal before homes become more expensive.

This can feel counterintuitive, considering the best time to buy a house definitely hasn’t been anytime in the last couple of years.

The median price for a home in the United States fell 12.4 percent in the fourth quarter of 2008, to $180,100. Even though we were reeling from a financial crisis, early 2009 would have been a great time to buy a home.

Compare that to now. The National Association of Realtors reports the median price for a home at $235,000 for the fourth quarter of 2016.

What about mortgage rates?

Mortgage rates have risen in recent months. But, even with January 2017’s average rate of 4.15%, it’s still lower than the rate of 5.05% in January 2009:

We focus on mortgage rates a lot, but the reality is that a low enough home price can be worth the higher rate. Even if you bought a home with zero down at today’s lower mortgage rate, buying in 2009 – when the housing market was close to bottom – offered a better deal.

Don’t rely on crashes for the best time to buy a house

You can’t always wait for a major crash. Those types of situations are decades in the making.

In some cases, the best you can do is get a feel for which way the wind is blowing.

Interest rates are on the rise; many experts expect mortgage rates to head higher in 2017, but that’s not all. Kiplinger’s housing forecast for 2017 calls for an increase in the median home price by five percent.

If you put stock in these forecasts and think economic improvement will push rates and prices higher, it makes sense to buy now – before homes become more expensive.

When you hope to buy makes a big difference. If you feel ready to buy now, and a home purchase matches your lifestyle, there’s no sense waiting around for another market crash. Sure, it could come in a few months. But it might also still be a few years off.

Local markets and seasonality

You know how certain consumer items go on sale during different parts of the year? It works the same way with homes.

There’s actually a best time of year to buy a house. Unfortunately for you, it’s probably not when you want to be out looking for a home and moving your things.

Zillow did some pretty thorough research on how different times of year impact the housing market in different parts of the country. Zillow’s research focuses on the best time of year to list/sell your home, so if you’re buying, it makes sense to avoid this “magic window.”

According to Zillow, the best time to list your home is mid-March to mid-April; you can take advantage of shoppers ready to buy during the summer months. As a buyer, you want to actually avoid buying in late April through the summer. You don’t want to give the seller a two percent premium.

Avoiding that seller window plays right into the idea from the National Association of Realtors that fall is the best time of year to buy a house. You have more time to find bargains, take advantage of year-end tax breaks, and real estate agents have more time to focus on your needs.

However, not everyone agrees on the best time to buy a home. RealtyTrac suggests that buying a home in February could result in a 6.1 percent discount over the rest of the year. January is number two on the RealtyTrac, with a 5.6 percent discount.

Consider local factors

Seasonality matters locally. After all, the weather is much nicer in Atlanta during March than it is in Idaho. But you don’t want to forget other local factors.

Sometimes, what’s happening in other markets – or even nationally – doesn’t have as big an impact on the market where you live. Take a look at the following comparison from Zillow:

Phoenix was absolutely destroyed by the housing market crash. Philadelphia barely saw a blip, comparatively speaking. Meanwhile, in my hometown of Idaho Falls, prices didn’t even begin really falling until 2011-2012.

When deciding on the best time to buy a house, knowing the local market trends can be a big help. A good real estate agent can help you evaluate the market trends and decide where you stand.

Your personal situation

Of course, while it’s nice to get a good deal on a home because you buy when the conditions are just right, the best test is your personal situation.

In the long run, the best time to buy a house is when you’re ready and your financial circumstances line up. Take into account your finances, your lifestyle, and whether you have reached your down payment goal.

Consider the reasons you want to buy a home, and how long you are likely to stay. In many cases, if the time feels “right” to buy, it doesn’t really matter what is happening with the market. If you can afford a home, find something that’s a good fit for your family, and you qualify for the best available interest rate, it makes sense to move forward.

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print, understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

Published in Buying a House, Mortgage